A Numerical Evaluation on a Sustainable Size of Primary Deficit in Japan

Real Arai and Junji Ueda
Additional contact information
Junji Ueda: Policy Research Institute, the Ministry of Finance, Japan

Discussion papers from Policy Research Institute, Ministry of Finance Japan

Abstract: We investigate how large a size of primary deficit to GDP ratio the Japan's government can sustain. For this investigation, we construct an overlapping generations model, in which multi-generational households live and the government maintains a constant ratio of primary deficit to GDP. We numerically show that the primary deficit cannot be sustained unless the rate of economic growth is unrealistically high, which is more than five percent according to our settings. Our result implies that Japan's government needs to achieve a positive primary balance in the long-run in order to avoid the divergence of the public debt to GDP ratio.

Keywords: fiscal sustainability; public debt; primary deficit; economic growth (search for similar items in EconPapers)
JEL-codes: E62 H62 H63 H68 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2012-06
New Economics Papers: this item is included in nep-dge, nep-fdg and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://warp.ndl.go.jp/info:ndljp/pid/10248500/www. ... ion_paper/ron235.pdf First version, 2012 (application/pdf)

Related works:
Journal Article: A numerical evaluation of the sustainable size of the primary deficit in Japan (2013)
Working Paper: A Numerical Evaluation on a Sustainable Size of Primary Deficit in Japan (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mof:wpaper:ron235

Access Statistics for this paper

More papers in Discussion papers from Policy Research Institute, Ministry of Finance Japan Contact information at EDIRC.
Bibliographic data for series maintained by Policy Research Institute ().